28 April 2022

Key insights from the 2021 benchmarking of Operations Professionals Network (OPN)

Philea’s Operations Professionals Network (OPN) brings the leaders of the operating functions of influential foundations together to work on issues of common interest. A strategic theme is to boost accountability and in that context, most of the members participate in a benchmarking exercise to establish comparable information on a key range of indicators of philanthropic programmatic output and operations.

This includes annual grantmaking, average grant size, amount under management per programmatic FTE, travel costs, salaries and office costs. The data set and analysis enable deeper comparative peer-to-peer analysis to generate insights into key cost drivers that could inform strategic decision-making around how to continuously improve the effectiveness and efficiencies of grant-making and grant management.

In 2021, the OPN benchmarking project and its participating organisations contracted Humentum, a development sector consultancy, to help attain the next level of benchmarking and analysis building on earlier exercises. A clear set of indicators to improve comparability  across membership were defined, and data points refined with each foundation for alignment. Two deep dive workshops were organised to help unpack the following questions:

  • how many programmatic staff do foundations need in order to manage their grants?
  • what staffing do foundations need in operations to support grantmaking?

These are complicated questions and those participating shared a significant amount of sensitive ideas and data which is kept within the group.  Some conclusions can be shared more widely, however.

OPN has found that, while there are clearly areas of convergence among OPN peer organisations, there are also many differences shaped by individual contexts, organisational setups and mandates. As a result there are wide ranges of outcomes within the group.  One major factor was the degree to which members employed a so-called ‘light touch’ approach to their grantees (minimal supervision) as opposed to high-touch with more regular in-house staff engagements. Humentum grouped members into 4 peer groups based on key aspects of their grantmaking model, and the key insights surfaced by the exercise were:

  1. Grants of low size tend to drive higher costs per EUR of grant disbursed. There are economies of scale as average grant sizes increase – this makes intuitive sense in relation to the fixed transaction costs of programme staff.
  2. High volumes of grants tend to drive higher programme consultancy costs.
  3. Higher grant size may drive investment in cross-cutting programme roles. Intuitively this seems to follow a logic similar to venture capital, the higher the investment in each grantee, the more it is worth putting additional value services into increasing their organisational effectiveness.
  4. Higher volume grant models seem to correlate with more outsourcing.
  5. Higher volume grant models require more staff for grant administration.
  6. High touch grantmaking naturally drives costs up.  

In terms of the deep dive discussions, both pragmatic and strategic reasons seem to inform decisions about investing in business partnering or whether to outsource.

The cost/benefit of business partners generated interest for further exploration by the members. A clear value added seems to be that business partner approaches upgrade the financial literacy among programme staff. Most members stressed a noticeable trend towards a broader interface of business partners with programme staff. 

In terms of outsourcing decisions, members provided examples that reflect a mix of factors including physical limitations, changing labour laws, board philosophy, or as a means to meet short term needs.

The 2022 iteration of the OPN benchmark is under preparation, and a steering body will co-decide the scope, KPIs, and deep dive themes in consultation with participating foundations. OPN members interested in getting involved, should please do get in touch with Stefanos Oikonomou to discuss participation modalities and how data confidentiality will be safeguarded.

Related News & Opinions